The statue of Justice at The Old Bailey in London, England. With a sword in one hand and scales in the other this statue of justice on top of the Old Bailey has one difference to many other similar pieces - in this case Justice herself has no blindfold. (Source: Royalty Free).

The digital revolution might be changing just about every aspect of society. But for some aspects, the changes can come slowly. Take for instance the legal and justice systems. Most of the work done in legal departments, law offices and courts still relies on paper-based processes, which can prove hugely costly.

Even courts that allow electronic filing still require physical copies of documents to be produced and kept for reference. Indeed, the legal system may be facing an uphill battle to handle the mounting costs from time consuming and cumbersome paper-based processes.

To illustrate the state of play and some of costs involved, according to the tariffs published in 2017 by Public Access to Court Electronic Records (PACER), which is provided by the Federal Judiciary in the United States (U.S.) that allows users to obtain case and docket information online from federal appellate, district, and bankruptcy courts, the cost per page of any case document via PACER stands $0.10 per page. (Note: This is not exceeding the fee for thirty pages).

OK, 10 cents might not sound like much. But just think for a moment about how many court cases and searches there must be right across America. And, the Case Management/Electronic Case Files (CM/ECF) system, of which PACER is a part, that allows litigants to file court papers electronically, includes filings in nearly 49 million civil, criminal, bankruptcy and appellate cases.

Add to that access to an audio file of a court hearing as of last year was $2.40 via PACER per audio file, and $30 per name or item searched via its service center. Critics also have described the system as clunky in terms of how easy searches can be made in order to retrieve documents.

Now while the numbers might be slightly old, such electronic public access fees generated $144.6 million in revenue in the fiscal year ended September 30, 2014, according to the Administrative Office.

Fortunately, the sector is not entirely opposed to digitization. Digital justice - encapsulating how the justice system and court rooms the world over can leverage technology to save money - is steadily gaining traction (i.e. including PA systems, large screens, video conferencing and high definition displays).

Aside from electronic filing, solutions such as scheduling, document management, and archiving are now increasingly becoming available. Telepresence technologies have also enabled courtroom hearings to be broadcasted online. U.S. courts even have an online video archive of select cases.

It is also worth bearing in mind here that most contractual disputes that go to arbitration take six months longer to resolve and cost 50% more than the contracted amount.

New breakthroughs from emerging technologies such as blockchain and distributed ledger (DLT) are creating new solutions as well. Blockchain's transparent and immutable record keeping is particularly attractive for legal applications.

Smart contracts, effectively computer protocols intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract, are already finding use to automate the fulfillment of agreements made through digital platforms. And, given its peer-to-peer (P2P) and decentralized architecture, blockchain can even be used to allow users to participate in activities such as online voting and deliberations.

Contracting For The Legal World

By way of background, the Accord Project, an initiative to develop open-source technology and standards for “computational contracting” for the legal world that deploys blockchain technology and distributed ledgers, announced its imminent launch back in July 2017.

At the time it was said to represent the first legal smart contracts consortium, with the initiativebeing supported by leading law firms as well as organizations including Linux Foundation’s Hyperledger and the International Association for Commercial and Contract Management (IACCM). And, this July, global law firm Norton Rose Fulbright announced that it had partnered with the Accord Project.

The initiative was hailed by the tech pioneers behind the venture, including Clause, a legal tech start-up pioneering data-driven contracts and ‘Software-as-a-Service’ product transitioning contracts from static documents into real-time, as a “milestone event” for the development of blockchain and distributed ledgers in legal contracting.

And, here are three other applications of blockchain technology that are touted as bolstering the digitization of the legal and justice systems.

Agreements

Due to the wide adoption of digital services and e-commerce, people are becoming more comfortable with entering agreements digitally. However, the means to manage such agreements could use some improvements. To start, there must be secure ways to ensure that agreements remain tamper-proof.

Blockchain can play a role in fulfilling this need for immutability. With the admissibility of blockchain records increasing, the technology can now be used to record and manage digital agreements.

Up-and-coming blockchain platform JUR, for example, aims to provide a convenient means for businesses to manage such electronic agreements. The platform allows users to easily create smart legal agreements using wizards, thereby eliminating the need for costly legal documentation. It also has an escrow function where funds are only released to a party once the conditions set in the agreements are satisfied.

However, a fundamental concern is how to translate the effect of a “wet ink” signature into electronic form. The U.S. already has an E-Sign Act, which makes electronic signatures for digital agreements lawful. But blockchain can still improve upon this.

A Judge talking to both lawyers in a court room. (Source: Royalty Free).

Legal Contracts

Typically legal contracts are in PDF or paper form. This means they have to be intensively managed. And, this often occurs (when an organization can afford it) through use of ‘Contract Lifecyle Management’ (CLM) software.

Peter Hunn, Founder of Clause, commenting last year prior to the Accord Project’s launch explained that: “This is used to extract salient information from contracts, which is then managed manually and in contrast to data-driven contracts, which are natively self-managing (e.g. a contract can update its state in response to events in the physical world, make payments when required, etc).”

Cryptographic keys can serve as unique identifiers. Agrello, founded by a team of Estonian lawyers, academics and IT experts with a combined of 45 years of industry experience, is using this technology for its digital identity system that allows users to create their own digital signature. Using their unique and verifiable ID, users will be able to “sign” agreements online akin to physically signing paper contracts.

The Agrello team, which has followed the development of blockchain technology since its infancy, claim they understand the “hurdles” contemporary smart contracts systems will have to overcome to be successfully implemented within established legal environments.

Dispute Resolution

Not all transactions and agreements between parties conclude smoothly. In some cases, they need to be resolved through some form of dispute resolution. Some may be able to resolve matters through consensual processes such as negotiation, while others may have to resort to using legal means such as arbitration or even litigation.

However, not everyone is keen on going to court given the cost of trials and the risk of unfavorable ruling by a jury. Arbitration sits at the middle where a third party is called upon to make a ruling on the case, but without the fuss of a courtroom.

Blockchain provides a digital alternative to these traditional mechanisms. JUR also features a dispute resolution feature. So, if ever parties need to resolve disputes, they can enter into an arbitration contract on the platform and stake tokens to be used as settlement.

The platform then employs game theory and an incentive system to encourage “oracles” - or a jury of peers - on the platform to vote. It provides a speedy but fair resolution of the matter in question.

Blockchain also makes dispute resolution more cost effective. Depending on the territory and its regulations, traditional arbitration may not come cheap. In the U.S., arbitration can end up costing parties hundreds to thousands of dollars to perform depending on the claim amounts.

Procedure

The legal and justice systems rely heavily on procedural correctness. Evidence, especially those that are to be presented in court, must be carefully logged whenever it changes custody. When this chain is broken, valuable evidence can be rendered inadmissible.

To underscore blockchain’s potential in revolutionizing the space, CaseLines, an evidence management platform that provides the Crown Court Digital Case System used in all the Crown Courts of England and Wales (there are some 80,000 cases in the system), recently applied for a patent to integrate the technology with its system.

The platform seeks to leverage blockchain’s immutability to store documents and records of how they move along the chain. Transaction records on the blockchain can be readily audited if needed. As such, this gives the platform additional levels of security and trust.

Swift Justice

As the adage goes, “Justice delayed is justice denied.” And, digitization supposedly makes things more efficient. So, legal and justice systems should stand to benefit from these new ways of doing things.

Through these aforementioned new services, blockchain can lend its many strengths and enhance these processes. These blockchain-based platforms could even take some of the load off the justice system by providing alternative venues for parties to settle. According to the protagonists behind such ventures, having such effective systems could only inspire trust and confidence in everyone. Pro bono publico.

I am a freelance financial journalist based in London and former FT staff writer covering stock exchanges and transaction services. In recent years I have written for a number of trade titles like Futures & Options World (FOW), magazines such as the FT’s Investors Chroni...